Government Spending and Human Nature

A recent “bottom story of the day” illustrated a fundamental inefficiency of large organizations and, by extension why government spending is so difficult to manage. The story, about how the US Department of Agriculture is going to hold a “summit” in support of lesbian farmers and to change the perception of a farmer away from a “white, rich male,” made me realize that too few people in government are serious about cutting spending.

Is this “summit” going to cost peanuts in the grand scheme? Indeed. Do I have anything against farmers? Of course not. Do I have anything against lesbians? Again, of course not. Is it my perception that farmers are “white, rich males?” Nope. Of course, my personal perceptions and attitudes are not necessarily the prevailing ones, but is there really a problem here of such magnitude that government intervention is needed?

Consider an anecdote from engineering days: Our group leader was approached by his higher-ups regarding an efficiency initiative implemented by their higher-ups. The bosses wanted to find out if there were practices that could be improved by one-time infusions of capital spending. The work got passed down to me, and in conjunction with others in my group I suggested some hardware and software spending that could reduce the time required for certain regimented tasks. Great and good. My boss, however, knew that the end goal of this initiative was to cut engineering hours i.e. save the company some money. So, he figured out a bunch of new work that would offset the expected budget cuts. His priorities were to preserve the size of his budget, not to help the company’s bottom line.

Anyone who’s worked in a large corporation has, at some time or another, witnessed or been involved with an end of year “use it or lose it” push to burn off unspent budgets. Lower and middle managers fear that efficiencies they achieved in the current year will be expected of them the next year, so they get creative in their job charging. Again, their priority is the protection of their budgets and, by extension, their jobs and fiefdoms, not the company’s bottom line.

This behavior is even worse on the government side, where there is no profit motive to cause upper management to run with a firm hand. Absent normal market pressures, government managers chase job security, something enhanced by the size of their fiefdoms. A 5 person team is easily disbanded and scattered to other corners of government (does anyone ever get laid off from government?) while a 500 person project has an “inertia” that pushes back against efforts to cut it. It’s been said that the hardest animal in the universe to kill is an ongoing government program.

All of this is rooted in human nature. People look out for themselves, first and foremost, and if they perceive that their own best interests are served by deviating from the organization’s, they’ll act accordingly. The only check against that comes from higher-ups, and the bigger an organization is, the harder it is for those at the top (who are motivated by organizational performance and efficiency) to prevail against the selfish acts of the lower ranks.

The takeaway: Cutting government spending is a Herculean task that will require enormous willpower and perseverance.

Government has grown to a monstrous size, yet we hear from high level politicians that there’s no room to left for cuts. Without a President AND a Congress deeply dedicated to cutting spending, government will only continue to grow. Sadly, we haven’t had a President of that sort in a very long while, and Congress is large enough to enable its members to exhibit the same sort of selfishness that the aforementioned middle managers do.

There’s an old Greek proverb:

Φασούλι, φασούλι γεμίζει το σακούλι

This translates to “bean by bean, the sack gets filled.” Do I have any reason to oppose the aforementioned “Rural Pride” summit? No. I am of no opinion on the issue. My only complaint is that it seems like the sort of thing that, given the involvement of a celebrity, could be done without government spending. Certainly, there are countless other such nickels and dimes rattling around the federal budget, and if we don’t attend to the nickels and dimes, there’s no way we’ll ever wrangle the monster that is the national debt.

The country is limping along in an extended economic malaise. Many of us know the answer to this problem. Do as Silent Calvin Coolidge did: slash spending and slash taxes. Unfortunately, when this is proposed, all those with the power to do so fight to impose cuts on others’ spending and resist cuts to others’ taxes. They’re encouraged by their constituents, who want the nation fixed and spending controlled in the abstract but don’t want any of the largesse they’re currently receiving or expect to receive (yes, Social Security and Medicare) to be touched. Selfishness at the expense of the whole, subversion from within.

This does not bode well for the nation. It tells us just how difficult the task of fixing the runaway government will be. Whether we view it as an endless game of whack-a-mole, where knocking spending down in one place merely pops it up elsewhere, or as Sisyphean, where we wake up every day to find yesterday’s gains wiped out, we must recognize that it’ll be an immensely frustrating task, more likely to fail than to succeed.

It also shows us what sort of leaders we need to elect. We need the “tough love” types, who’ll restore government to its proper small role, and refuse to keep feed our dependencies. Unfortunately, subversion from within is a wickedly hard human trait to fend off, and I fear that the only chance at fixing things will be after a collapse.

We must, however, try. The nation is facing a $19 trillion national debt, a federal budget deficit that exceeded $400 billion last year, and unfunded Social Security and Medicare liabilities that make the national debt seem trivial. Economist Herbert Stein observed that “If something cannot go on forever, it will stop.” Our reckless federal spending is unsustainable. It cannot go on forever. It will stop. Whether it stops because we put on the brakes, or because it crashed into a mountainside, is up to us.